Supply Chain Strategy and S&OP
Developing a supply chain strategy supporting the company’s objectives is a prerequisite for effective S&OP. This article discusses how to create an effective supply chain strategy by defining the company’s competitive strategy, identifying Critical Success Factors (CSF), and defining Service Level Agreements (SLA).
Effective Supply Chain management is essential for companies to remain competitive and profitable in today’s fast-paced and dynamic business environment. A key element of successful supply chain management is to develop and implement supply chain strategies that align with the company’s overall objectives. A well-defined Supply Chain Strategy is a prerequisite for effective Sales and Operations Planning (S&OP). The Supply Chain Strategy sets the direction and boundaries for the S&OP process, enabling cross-functional collaboration and alignment with the company’s overall objectives.
The S&OP process is essential to foster collaboration within a company, balance supply and demand, and align the company’s different functions with the corporate strategy. However, in many companies — even mature ones –S&OP doesn’t deliver on its promises because of a fundamental misalignment between different functions. Indeed, sales and operations often look at the same problem from different angles and do not agree, causing a misalignment in understanding the corporate strategy.
Supply Chain Strategy
The Supply Chain Strategy is a guiding framework for making supply chain decisions and prioritizing initiatives to achieve the company’s objectives. It encompasses decisions related to sourcing, manufacturing, distribution, inventory management, and customer service.
A good starting point for developing a Supply Chain Strategy is to analyze the company’s competitive strategy. This involves understanding why customers choose a company over its competitors and what the company can do to maintain that competitive advantage.